Why MIMO And Its Worlds First Decentralized Euro Stablecoin?
An independent research article by Blockchain Researcher Lin Yi-Wei.
The Parallel Protocol is a decentralized stablecoin issuance protocol on the Ethereum blockchain. Parallel stablecoins are decentralized, non-custodial, collateral-backed, and fully redeemable synthetic assets pegged to a fiat currency (MIMO-white paper, p.1). When launched, Parallel Protocol provides one kind of stablecoin called PAR, which is pegged with Euro. As time goes, Parallel Protocol will hand over the control to a diverse community of people, who hold the MIMO governance token and successively decentralize itself. So how do Parallel stablecoins keep stable? They are kept stable by collateral locked in smart contract Vaults.
The next question is why did MIMO launch a new stablecoin? Unlike before, the growth of stablecoin usage for transfers, instead of using volatile crypto-currencies. People nowadays coming into this industry usually have a lower risk tolerance, so instead of seeking high-risk high-return, they intend to look for returns denominated in their currency. MIMO found this change of mindset and came up with a unique opportunity by offering a fully decentralized stablecoin platform with savings & loans. This will allow us not only can move fast and leverage the existing trends in DeFi, but also offer a highly competitive product to the crypto-curious European.
Even better, a proportion of the fees collected from borrowers are used to incentivize the liquidity of PAR Automated Market Maker (AMM) pools. This mechanism will improve the market depth so that users or PAR holders will not encounter huge slippage when swapping coins via Parallel Protocol. Liquidity providers can also earn attractive rates by putting their liquidity to an AMM pool and will receive the pool’s trading fees as well as additional income collected through protocol fees, such as orientation and borrowing fees (MIMO-white paper, p.6).
Another reason why MIMO launched a new stablecoin is that today’s stablecoin market is dominated by USD-denominated stablecoins, so trusted stablecoin issuers face negative interest rates in Europe, which is undermining the viability of the interest rate arbitrage. PAR is not just like any other stablecoin. Instead, it is the first launched EUR stablecoin that gets a great opportunity to win the entire EUR stablecoin market.
After knowing the benefit of PAR, let’s talk about MIMO. MIMO governance tokens are distributed to users of the protocol for both creating PAR through borrowing and for providing liquidity in AMM pools. This token distribution guarantees that the protocol stewardship remains with the users and the community of the Parallel Protocol (MIMO-white paper, p.24). Below is the full structure of liquidity mining, showing you exactly how the system works.
Holders of the MIMO can vote on the ongoing operations and upgrades to the Parallel Protocol. The Parallel Protocol governance system a set of smart contracts that allows MIMO token holders to accrue voting power and vote on proposals that implement changes to the protocol in a decentralised manner. To participate in Parallel Protocol governance, token holders must lock their MIMO in the VotingEscrow contract. Users’ voting power decays as their lock period comes closer to expiration but can be extended at any time, and they receive non-transferable vMIMO in exchange as the following:
|Locked Amount||Duration||Voting Power|
|1 MIMO||4years||1.00 vMIMO|
|1 MIMO||3years||0.75 vMIMO|
|1 MIMO||2years||0.50 vMIMO|
|1 MIMO||1year||0.25 vMIMO|
(MIMO-white paper, p.28)
In short, MIMO is the kind of token that you can participate in the management. If you want to make some changes to improve its value, just create a proposal and call for a vote. The longer you locked your MIMO governance tokens, the more voting power you have. What’s more, MIMO also has a great deflation model that guarantees that there will never be more than 1 billion MIMO tokens. The holders don’t need to worry about the price declining hugely or their assets shrink dramatically due to inappropriate token distribution.
If you have some concern about MIMO’s liquidity and tradability, its governance token mimo and stablecoin PAR have officially been listed on Bittrex Global, which has the maximum Cryptocurrency trading volume.
“It’s been an exciting past few months for Mimo and our tokens. With all the news surrounding the dollar, PAR is an easy addition to many crypto portfolios I’m seeing and this listing on Bittrex is just another way to offer this stability to more users,” says Nick Calabro, Growth Manager at Mimo.